Cars, Trump and new tariffs

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Everyone here is crying today about the new 25% tariffs on European car imports to the US. But how is it the other way around? I would choose a Ford Mustang as my dream. An iconic car for teenagers, but why not for retirees too. But hey, the minimum price on offer is 1,591,000 CZK (69 173 USD). Equipped with a 5.0-liter V8 engine.

And how much does it cost in the US? A similar configuration in the US is 32,925 USD, which is approximately 757,000 CZK. So, I would say so. For this price I have a suffocating 1.2-liter engine.
But as soon as it is imported to us, a 10% tariff is applied to it, and 20% VAT is added to the purchase price including tariff. So, 32,925 + 3,293 = 36,218 * 1.2 = 43,161.6 USD. That’s already a million. Then there are the costs of sales, transportation, etc. and we’re at 1.5 million CZK.

When I add it up, poor Ford. If a car here cost like in the USA, i.e. 757,000 CZK, I probably wouldn’t buy another Peugeot and would enjoy a Mustang for life.

So, if I look at it the other way around, our car was exported to the US with a 2.5% duty, but since the US does not have VAT, this duty surcharge was almost a definitive tax burden. The rules are different in different states, and in some cases consumption tax, homologation and modification fees, or sales tax can be applied. But when I add it up, importing cars from Europe to the US is advantageous, duty and taxes up to 10%, compared to importing cars from the US to Europe, duty and VAT totalling 30%. So why are we surprised?

The imposition of new duties of 25% on cars and components is changing the situation. For Europe to maintain prices in the US, it must reduce the cost of producing cars by 20 to 25%. Is it feasible? I’m afraid not right away. The automotive industry will therefore be under great pressure to save costs. My gut feeling tells me that this could speed up the application of GIGA casting, but if there is still some iron left in the car, there will be an effort to keep its price to a minimum, including alloying.

If at the beginning of the millennium it turned out that nickel-alloyed case-hardening steel would prevail, today it is certain that 16MnCr5 and 20CrMn5 will win. So, goodbye to hardening in 20 bars of nitrogen. We will need oil or 20 bars of helium. After all, Škoda Auto has already chosen this direction with helium. But what about commercial hardening plants?

So, I see it more in terms of oil and two-chamber vacuum furnaces with oil hardening. But that is not entirely clear either. A good washing machine today costs almost as much as a vacuum furnace. And the same applies to helium recuperation. So, in the end, the investment will be the same, but we already have washing, we must buy a 100% new helium recuperation. And if we don’t know, then a hybrid device from ECM, such as FLEX or JUMBO, is the way to go

Jiří Stanislav

March 30,  2025